In response to the COVID-19 pandemic, the Internal Revenue Service and the Pension Benefit Guaranty Corporation extended many deadlines for retirement plans, discussed below.
Remedial Amendment Period Extensions
In the first set of extensions, on March 27, 2020 the IRS announced an extension of the remedial amendment period for 403(b) plans from March 31, 2020 to June 30, 2020, and also extended the remedial amendment period for preapproved defined benefit plans from April 30, 2020 to July 31, 2020. These extensions provide welcome relief to employers trying to amend plans in a new remote working environment – for their workers and service providers – while also focusing on critical COVID-19 concerns.
For 403(b) plans, the remedial amendment period gives both preapproved and individually designed 403(b) plan sponsors the ability to correct plan document defects retroactively to January 1, 2010 – the initial date by which 403(b) plans were required by 2007 regulations to have a written plan document in place.
For defined benefit plans, the remedial period is for updating or adopting a preapproved defined benefit plan and is available to plans using a preapproved plan document as well as plans using an individually designed plan document that want to convert to a preapproved document format. If eligible to apply for a favorable determination letter, the deadline to file for the favorable determination letter is also extended to July 31, 2020.
General Deadline Extensions
On April 9, 2020, the IRS issued Notice 2020-23 under which many retirement plan deadlines are extended to July 15, 2020 if the plan deadline otherwise falls during the period beginning on April 1, 2020 and ending on July 14, 2020. Key extensions under the Notice include:
- Form 5500 filing. The filing extension applies to plan years ending June 30, 2019 through November 30, 2019, and to plans that have an extended deadline that falls in the April 1, 2020 through July 14, 2020 extension period. The filing extension also applies to any form or attachment that is required to be submitted with the Form 5500. Notably, the extension does not apply to calendar year plans because the Form 5500 due date for a 2019 calendar year plan is July 31, 2020.
- Excess deferral refunds. The deadline to refund excess elective deferrals for 2019 is extended.
- ADP/ACP failures. Distributions to highly compensated employees to correct an ADP or ACP failure is extended.
- Plan loan repayments. The due date for loan repayments that are otherwise due during the April 1 through July 14 extension period may be delayed to July 15, 2020 if the plan sponsor decides to implement this delay. (This is different from the repayment extension under the CARES Act.)
- 60-day rollover period. The deadline to make an indirect rollover of a distribution from a qualified plan or IRA is extended if the 60-day rollover period ends during the April 1 through July 14 extension period.
- EACA withdrawals. If the end of the 90-day period for withdrawing contributions falls during the April 1 through July 14 extension period, the deadline for withdrawal is extended.
- Required minimum distributions. The required minimum distribution for a required beginning date of April 1, 2020 is extended.
- The deadline is extended for several ESOP transactions: the investment diversification period, C Corp dividend distribution, repurchase obligations, and the period to purchase qualified replacement property.
- The 2-year correction period to utilize self-correction for a significant operation failure is extended.
Under the PBGC’s disaster relief policy, extensions are triggered when the IRS delays the Form 5500 filing deadline (which was extended in Notice 2020-23 as discussed above). On April 10, 2020, the PBGC announced an extension to July 15, 2020 for filing deadlines and premium payments that would otherwise be due during the April 1, 2020 through July 14, 2020 extension period. The extension does not apply to items on the PBGC “Exceptions List:”
- Advance notice of reportable events (Form 10-Advance).
- Notice of missed contributions (Form 200).
- Post-event notices (Form 10) for:
- Failure to make required contributions under $1 million
- Inability to pay when due
- Loan default
- Insolvency or similar settlement.
- Actions related to a distress termination for which the PBGC has issued a distribution notice.
To take advantage of these extensions, the PBGC must be notified by the July 15, 2020 extension date of the plan’s eligibility for relief. The PBGC encourages notice by email.
If you have questions about the application of any of these extensions, please contact me or the Burr lawyer with whom you regularly work.
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